But, many states are dragging their heels on building the necessary
infrastructure — and some have outright refused to do so.

This lack of action poses a significant challenge to get the law up
and running.

Continued Republican opposition to the 2010 law, the U.S.
Supreme Court battle to determine its constitutionality, and ongoing
uncertainty over the future of health reform after the upcoming presidential
election have stymied progress on exchange development, policy experts say.

"The ACA (Affordable Care Act) cannot be implemented without an
insurance exchange in each state. It's a go or it's a no-go. It's that
simple," said Robert Laszewski, president of Health Policy and Strategy
Associates Inc., an Alexandria, Va.-based consulting firm.

So far, only 15 states and the District of Columbia have established
exchanges, and three others — Arkansas, Delaware and Illinois —
have indicated that they will partner with the federal government to do it,
according to the Henry J. Kaiser Family Foundation.

Creating insurance exchanges — which are designed to make it
easier for consumers to shop for insurance — is just one of two big
hurdles facing the health reform law. The Supreme Court ruling in June
upholding the constitutionality of the Affordable Care Act also allows states
to opt out of the law's Medicaid expansion provision — a key piece in
the drive to bring insurance to an estimated 30 million uninsured
Americans.

Critics of "Obamacare" hope that state resistance on both
fronts will stop the reform effort in its tracks.

State-based health insurance exchanges are a critical part of the
planned January 2014 expansion of insurance coverage through the Affordable
Care Act, President Barack Obama's signature policy initiative.

Beginning with enrollment in October 2013, individuals and employees
of small businesses who are uninsured can go to the exchanges to compare
private health plan options
across four levels of coverage — bronze, silver, gold and platinum —
and purchase coverage.

The exchanges must ensure that each health plan offers a sufficient
number of providers and meets other minimum standards. To participate in an
exchange, an insurer must offer at least one "gold" and one
"silver" health plan.

Each state's exchange must also maintain an up-to-date website with
comparative health plan information; maintain a toll-free, consumer call
center; and fund a "navigator" program to assist individuals and
families with obtaining coverage. The exchanges are also the vehicle for people
who meet certain income thresholds to qualify for tax credits to reduce their
premium costs and federal subsidies to lower out-of-pocket expenses.

The federal government is offering premium assistance in the form of
refundable tax credits to people with incomes up to 400 percent of the federal
poverty level ($44,680 for an individual and $92,200 for a family of four in
2012) and out-of-pocket spending caps on covered services.

Some GOP governors critical of exchanges

Republican governors in six states have decided not to create a
state-based health insurance exchange, and New Hampshire Democratic Gov. John
Lynch, in the face of GOP
opposition, signed legislation barring the state from creating its
own exchange. As many as 16 states are still exploring their options and nine
states have shown little progress in planning their next steps, according to
the Kaiser Family Foundation's latest tally.

In states that do not create an exchange, the federal government has
the authority to do it for them.

States have until Nov. 16 to notify the U.S. Department of Health and
Human Services (HHS) of their plans to create an exchange or partner with HHS
to help create one. That gives states precious little time after the Nov. 6
election to submit plans and get an exchange up and running by October 2013.

The federal government insists that it's up to the task of working
with states to ensure that the exchanges are in place by the
deadline.

"We can guarantee that consumers in every state will have an
exchange in place by 2014. There's no question about that," said Fabien
Levy, HHS press secretary.

Laszewski isn't so sure. "The administration has been emphatic
this last month that they will be ready, but they're not being at all
transparent about it. We have no idea how much progress they have or haven't
made," he said.

Although HHS issued a final rule on the design and implementation of
insurance exchanges in March, many issues remain unresolved, explained Cristine
Vogel, associate director in the Chicago health care office of Navigant
Consulting Inc., a specialty global consulting firm. The unknowns range from
how the government will resolve consumer appeals to how much it will cost
states to use the federal exchange, she said.

Detractors, supporters debate exchanges'
value

What do states gain by refusing to establish an exchange?

"We look at state refusal as one of the ways that states can
protect themselves from the overreach of federal law," said Twila Brase, a
registered nurse and president of the St. Paul, Minn.-based Citizens' Council
for Health Freedom, which opposes the Affordable Care Act. One way the delay
protects states, she said, is by avoiding the high cost of operating an
exchange, estimated to run anywhere from $10 million to $100 million a year,
depending on the state.

Others see state refusals on health exchange creation as little more
than political posturing.

"I think they're taking a political gamble hoping that President
Obama is [not reelected], and that is really putting all your money on one
number," said Navigant's Vogel. "[They're saying] 'I did not support
Obamacare at all.'"

Jon Kingsdale, managing director and co-founder of the Boston office
of Wakely Consulting Group and former executive director of the state agency
serving as Massachusetts' health insurance exchange, doesn't believe states
will shut themselves out of the process of creating an exchange.

"My own sense is that even if the state backs completely away
from doing the exchange, there'll still be some coordination" with the
federal government, he said.

Even though many people would benefit from the tax credits and
consumer assistance that exchanges will offer, exchange implementation, for the
most part, isn't even on consumers' radar.

"I really doubt too many people even understand the health-care
reform law and the exchanges," Vogel said.

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